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Foreign governments are criticizing the Federal Reserve’s policy of Quantitative Easing. Consider an ISLM model for Germany. Where does Quantitative Easing by the U.S. show up?

a. In the LM Curve.b. In the IS Curve, from changes in autonomous consumption.c. In the IS Curve, from changes in disposable income.d. In the IS Curve, from changes in Investment.e. In the IS Curve, from changes in Net Exports.

Sarah Palin quoted Ronald Reagan, who characterized inflation as “violent as a mugger, frightening as an armed robber, and deadly as a hit man.” True or false: inflation right now is lower than at any other time since 1961.

True

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True or false: Very low inflation raises real interest rates.

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